Capital erosion

ps2659

Is it possible to get 5% income from a stocks and shares ISA without erosion of capital, retirement looming.

AnotherJoe

Possible is a vague word. Did you really mean "is it certain" ? Or did you have a certainty factor in mind? Let's say, with 90% certainty over 20 years or whatever ?

So, Yes,its possible. It's also possible that you won't be able to do it.
Unless you have a buffer of cash to draw from in market downturn years you'd need a lot of luck especially in the first years.

Look at cfiresim.

Pincher

http://www.londonstockexchange.com/exchange/prices-and-markets/stocks/summary/company-summary/GB0033875286GBGBXSSMM.html?lang=en


http://www.hl.co.uk/shares/shares-search-results/s/standard-life-property-inc-trust-ord-1p/dividends


Share price 86.25p, dividend 4.64p.

Dividend yield 5.38% = 4.64 / 86.25

You don't even need an ISA, since you can have £5,000 dividend a year tax free.

Possible? Does five years of dividend between 4.47p ~ 4.64p help?

Please don't ask is it forever.

economic

Pincher wrote: »

http://www.londonstockexchange.com/exchange/prices-and-markets/stocks/summary/company-summary/GB0033875286GBGBXSSMM.html?lang=en


http://www.hl.co.uk/shares/shares-search-results/s/standard-life-property-inc-trust-ord-1p/dividends


Share price 86.25p, dividend 4.64p.

Dividend yield 5.38% = 86.25 / 4.64

You don't even need an ISA, since you can have £5,000 dividend a year tax free.

Possible? Does five years of dividend between 4.47p ~ 4.64p help?

Please don't ask is it forever.

thanks might look into buying this.

why botheer buying BTL when one can just buy this? yes i know you cant leverage but still.

economic

economic wrote: »

thanks might look into buying this.

why botheer buying BTL when one can just buy this? yes i know you cant leverage but still.

sorry just reaised this is a commecial RE fund. somewhat riskier then residential. hence the yield.

Pincher

http://www.hl.co.uk/shares/shares-search-results/h/hsbc-holdings-plc-ordinary-usd0.50

Even after the meteoric rise, it's still yielding 5.1%.

If the American buy-back program happens, there's more upside.

Should buy it just for the March dividend, which is a double dip.
Already got a shed load, mustn't be greedy.

economic

Pincher wrote: »

http://www.hl.co.uk/shares/shares-search-results/h/hsbc-holdings-plc-ordinary-usd0.50

Even after the meteoric rise, it's still yielding 5.1%.

If the American buy-back program happens, there's more upside.

Should buy it just for the March dividend, which is a double dip.
Already got a shed load, mustn't be greedy.

nice. find me another 8 5% yielders, then i have a portfolio of 100k fairly well diversified and maxing ou tmy dividend allowance.

Thrugelmir

economic wrote: »

nice. find me another 8 5% yielders, then i have a portfolio of 100k fairly well diversified and maxing ou tmy dividend allowance.

Not diversified if all high yielders. Why are they high yielders is the question you need to answer. If rock solid would have been snapped up by investors.

economic

Thrugelmir wrote: »

Not diversified if all high yielders. Why are they high yielders is the question you need to answer. If rock solid would have been snapped up by investors.

then why buy anything? just hold cash if you believe in that.

Morphoton

As long as you understand the risks there are equity income funds that yield around the 5% mark which will contain a diversified portfolio of higher yielding shares. For example:
Active funds:
Merchants IT (MRCH) 5.3%
Dunedin Income Growth IT (DIG) 4.6%
Passive:
iShares UK Dividend UCITS ETF (IUKD) 4.9%
There will be others if you do further research.

Linton

IUKD provides a perfect example of the risks of drawing down all the natural income from a dividend fund. If you had bought it in June 2007 your capital would still be over 30% down on your initial investment.

Presumably what you really want is a steady income inflation adjusted. History and cfiresim.com show that 5% of the initial pot is not safely sustainable. If you are prepared to be flexible about your drawdown and take less during the bad times an initial 5% is around the limit without major periods of low income.

There is a lengthy thread on the topic of maximum sustainable drawdown, but I can't easily find it using my iPad.

Between April 2007 and April 2009 IUKD dropped 60%. If you want dividend income passive funds may not be the best option.